A marketing research firm today confirmed that the liquid crystal display
industry is in the midst of a sharp price rebound, which is good for
Asia-based electronics manufacturers but not so good for buyers of notebook PCs.

Market researcher Stanford
Resources said today that a shortage of high-quality liquid crystal
displays (LCDs), which started at the end of 1998, is driving up the price of
this critical PC component.

"There was a shortage in TFT-LCD panels at the end of 1998. The increase in
desktop monitor [LCD] production will extend this shortage through
the fourth quarter of 1999," said Sweta Dash, senior market analyst at
Stanford. High-quality LCD screens are referred to as active-matrix or TFT screens.

The net result for Japanese and Korean manufacturers is recovered revenue.
"Price increases and a 170 percent growth rate in the liquid crystal
display monitor market in 1999 will recover all lost revenue, adding $5
billion in 2000," Dash said. This upturn comes after steep price
reductions clobbered display makers in the first half of 1998, which
resulted in a $2 billion revenue decline for LCDs used in portable
computers, according to Stanford Resources.

For consumers, however, the effect may not be beneficial at all as the
shortages could drive up computer prices. LCD costs are crucial for
determining the price of computers such as notebook PCs, because they comprise
as much as one-third of the overall cost. Price hikes over the last few
quarters have been as high as 15 percent, according to DisplaySearch, a research firm that
covers the display market.

Last month, DisplaySearch said that notebook PC manufacturers, for
the most part, have been absorbing the costs. But this may change, and
prices on some notebook models from major manufacturers could begin to
increase this quarter by $100 to $150.

Stanford, however, sees the supply constraints easing next year. "The
supply crunch will be eased, though, beginning in 2000, with the addition
of capacity in Korea and Taiwan," the report said. "This is good news for
the notebook-computer and LCD-monitor sellers who have worried about rising
prices since late 1998. There is enough capacity to serve the mainstream
12- to 15-inch-diagonal sizes, but it will require very skillful
coordination of factory capacity to avoid shortfalls in the third and
fourth quarters of 1999," said David Mentley, vice president of Stanford
Resources.

The study comes after a number of Japanese manufacturers including Sharp, NEC,
and Toshiba started pushing up LCD
prices earlier this year in the face of a supply shortfall. In April, Matsushita Electric Industrial, a
relatively small LCD maker, said it would raise prices of active-matrix
screens by about 10 percent, according to Japan-based reports.

For Japanese makers, this has been a dramatic reversal of fortunes:
Japanese makers over the last few years have been in the doldrums and
wracked by losses because of a seemingly endless glut of displays.

DisplaySearch and others have said the price reversal was brought on by
tepid investment in facilities over the last few years and a surge in
demand for active-matrix LCDs. Because of the supply glut of past years,
prices on active-matrix screens came down to the levels of the less
expensive, lower-quality passive matrix LCDs. This price parity suddenly
triggered demand for the higher-quality active matrix screens. This
eventually led to over-demand.

On top of this, both Stanford and DisplaySearch say manufacturers are now
supplying active-matrix screens to the desktop PC market. This new market
is increasing in size quickly--it jumped from only a few hundred thousand
screens in 1997 to 1 million in 1998 and is projected to reach 3 million
this year, according to DisplaySearch.

Also, the demand for notebook PC screens continues unabated, at growth
rates of about 14 percent. The 13.4-million-unit market in 1998 is projected
to increase to near 16 million in 1999, DisplaySearch said.

Japanese makers have been calling for price hikes as high as 20 percent in
order to recoup losses, and prices for certain screen sizes have jumped as
much as 40 percent from the rock-bottom lows of last year due to market
conditions, according to Japanese reports.